Senate Could Hit A Snag In Funding Obamacare Subsidies

President Donald Trump hinted mid-May that Congress can find a way to continue funding Obamacare subsidy payments, but in actuality the process looks difficult, if not impossible, for lawmakers.

The president reportedly told aides in the Oval Office May 16 that he was willing to cut funding for Obamacare cost-sharing reductions (CSRs) and other Obamacare subsidies all together. Trump said that if lawmakers wanted, they could find a way.

The president and Speaker of the House Paul Ryan filed a motion Monday with the U.S. Court of Appeals for the District of Columbia Circuit, seeking an extra 90 days in the ongoing battle over funding Obamacare CSR payments.

Republican leadership’s decision to seek a continuance in the case could have some troubling effects on the insurance market, as it creates a great deal of uncertainty in the marketplace.

Essentially, the continuance means that uncertainty for insurance providers regarding whether or not the administration will continue paying CSRs ensues with no foreseeable end in sight. Insurers may make hasty decisions or try to compensate for the uncertainty in other means, like raising prices for other consumer groups to make up the difference or by withdrawing from insurance markets altogether. (RELATED: Trump Will Delay Obamacare Subsidy Hearing)

As it stands, some $7 billion is allocated to CSRs this year and another $10 billion is slated for 2018. Effectively, insurers could be left with up to $7 billion in bad debt. Also, consumers could face backbreaking premiums.

“After the filing yesterday, we want to reinforce our position that the cost-sharing reduction program is critical for millions of Americans,” Cathryn Donaldson, director of communications for America’s Health Insurance Plans, told The Daily Caller News Foundation. “Without this funding consumers could see fewer plan choices in the market, increased costs, and reduced access.”

The Senate is currently reviewing the American Health Care Act (AHCA), which members of the House passed early May. Senators are trying to pass health care reform through the budget “reconciliation” process, which requires that every provision or amendment have a direct impact on the budget.

Insurance companies are pushing for lawmakers to fund Obamacare subsidies through the 90-day window. However, senators cannot simply include CSR payments in the health care legislation.

Current federal spending projections assume that CSRs are getting paid, so lawmakers can’t easily include that during reconciliation. Senators would have to adjust CSR payments such that they either save or cost money in the budget.

Conservatives have let their feelings about Obamacare subsidies known, signalling their willingness to let the system implode under its own weight.

Moderate Republicans, however, are nervous that completely stopping Obamacare subsidy payments and gutting Obamacare’s Medicaid expansion program will cause a slew of problems for Republicans in the 2018 mid-term elections.

Some 20 Republican senators are in states that chose to expand Medicaid under Obamacare, and many are concerned about the number of Medicaid recipients who would lose coverage under the AHCA.

Democrats in the Senate are sure to oppose any Republican proposal to repeal and replace Obamacare, as they feel a duty to support former President Barack Obama’s hallmark legislative achievement. A slew of negative coverage surrounding the AHCA and a CBO score that predicts massive losses in insurance coverage have Democrats angling to use Obamacare repeal as a chief campaign issue in the upcoming 2018 mid-term elections.

With Democrats united in opposition, Republican lawmakers will have to reach a consensus to pass the AHCA in the Senate.

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